Could modular construction be an answer to the housing crisis?

Modular construction is making a comeback as Europe’s urban areas grapple with growing populations and a shortage of housing

January 17, 2019

More factory-built homes are being manufactured each year – and as they shake off the negative connotations of 1950s prefab homes, they could be the key to meet the growing need for urban housing in Europe.

Thousands of modular homes are being built across the UK as cities gear up to tackle the housing shortage; eight of the top 10 housebuilders are now turning to modular construction in some form. Other players are joining the housebuilding industry too. Investor Legal & General launched a modular housing line that will deliver 3,000 homes each year, while dedicated modular housing developer Ilke Homes has announced a target of 4,000 homes in the next two years.

“Modular construction is gaining momentum as an effective means to build affordable housing – and we’re yet to reach its greatest speed,” says Tim Barber-Lomax, senior analyst for UK residential at JLL.

The building methodology emerged in the 1950s as a way to quickly build homes desperately needed after the second world war. Units are constructed in factories, then shipped to construction sites to be assembled, slashing build times from 40 weeks to ten days.

“Modular construction has had more negative connotations, but certainly today, it delivers quality builds because units are constructed in factory-controlled conditions, offering far more precision and capabilities in design and execution than usual traditional construction methods,” says Barber-Lomax.

Contemporary modular homes not only generate less construction waste as the bulk of building occurs off-site , they’re often built to higher energy efficiency standards, making use of the latest green technology and architecture such as solar panels, rainwater systems and recycled materials.

A lower price point for cash-strapped buyers

Lower costs due to reduced time and labour on construction sites are a further advantage. Bristol-based Modulhus, for example, builds a two-bed house for £50,000, plus the cost of labour, land and fitting utilities.

“Modular construction has the potential to ease the housing crisis with new builds that can be built quickly – and crucially, are affordable,” says Barber-Lomax.

Such homes can be built on a much smaller footprint than traditional housing, allowing new builds to be assembled in land-scarce areas such as urban centres – and because the majority of construction takes place in a factory, it could also help alleviate the skills shortage in the construction industry.

Breathing new life into the housing market

In turning to modular construction, the UK is playing catch-up with other European countries. In Sweden, it’s long been used for housing, while Germany’s thriving modular market includes developers and buildings at numerous price points – including the luxury, glass-fronted homes of Huf Haus.

And building new homes is a priority. In England, the government has pledged to build 300,000 homes a year; last year, it reached 217,000 – but only a fifth of these were affordable.

Furthermore, the structure of the housebuilding industry means it is incapable of meeting housing demand, Barber-Lomax says. “Small-to-medium sized housebuilders are facing reluctance from banks to lend. This, coupled with rising land values and build cost inflation, is preventing new entrants joining this marketplace and build homes we so desperately need.”

The rise of modular construction, with its reduced costs and build times, is allowing smaller housebuilders to enter the market.

“Increasing the number of small housebuilders is something the government has been encouraging for years but with limited success,” notes Barber-Lomax. “Modular construction is acting as an enabler, offering easier entry into housebuilding for new developers. Precision-engineered homes means there are less errors and costly disruptions, plus the cost of development finance is reduced with faster build rates.”

Opening the way for innovative housing

Modular construction is increasingly used to erect temporary housing too – for example, in emergency situations or as accommodation for people struggling to find an affordable home.

In Rotterdam, the government is looking to meet a housing shortage through the construction of 3000 modular mobile homes, while in London, a 24-home “pop-up village” is designed to be de-assembled and relocated every few years to areas where housing needs outstrip supply.

And while critics have expressed concerns that factory-built buildings could relegate swathes of families to cramped, carbon-copy homes, this too is changing with the advent of technology-driven developers. Nu Living, for example, operates a series of modular projects whose digital blueprint allows buyers to configure future homes from a variety of layouts and design specifications.

Technological innovations are also set to transform modular homes further, such as a 3D injection process inspired by aerospace industries that would allow for stronger, lighter panels that can be flatpacked – and far more easily transported. The world’s first modular skyscrapers have also broken ground in Croydon in the UK.

“Modular construction isn’t necessarily a silver bullet for the construction industry’s issues, but it’s close,” says Barber-Lomax. “In the near future, modular homes will become increasingly common, designed for affordability and quality, while offering people the opportunity have a say in personalising their new homes.”